Which Retailers Are Winning In The Blogosphere? New Research Tracks Consumer Generated Buzz

By Amanda Ferrante

Value retailers such as Costco and BJ’s Wholesale Club with reputations for selling quality merchandise at low prices are benefitting from positive buzz in the blogosphere. The two wholesales clubs received the most favorable Consumer Generated Media (CGM) coverage across the retail industry, according to the conclusions of a recent study from CARMA International, a global media analyst firm.

The study, “U.S. Retailers: Winners and Losers in the Blogosphere,” reflects research from a compilation of more than 3,700 blog posts and other consumer generated discussions about 17 of the largest US retailers in three sectors in the industry in the months of January and February. In contrast, traditional department stores (Macy’s and Sears) and mass merchants (Kmart) fared poorly.

Not surprisingly, another key quality of coverage was that the more a retailer was affected by today’s economic turmoil, the worse its coverage was. Macy’s exemplified this trend, as recurrent concentration on its poor earnings and store closings resulted in some of the worst coverage overall in the industry.

CGM coverage of the wholesale and club store sector was dominated by Costco, which appeared in 25.7% of all CGM reports analyzed, the second largest share of coverage behind retail giant Walmart (42.3% of posts analyzed). As a result of combining strong showing by share of coverage and its solid favorability performance, Costco by far has the best overall performance. It did, however, take second to BJ’s Wholesale Club in favorability.

Costco emerged along with Target to be the only two retailers that exceeded the industry’s share of voice and favorability averages. Overall, 89.6% of blog reporting on Costco focused on its offerings or visits to the store, with both receiving moderately favorable attention. 35% of stories consumers shared in the blogosphere were centered on Costco’s deliverability in the grocery sector, while 10.4% focused on the consumer electronics sector.

Quality, Not Quantity
Coverage of Walmart, which CARMA referred to as “the industry’s bright, shining financial light,” had a subpar overall performance, as it had frequent, but often negative, attention. Walmart received the most CGM reporting in the retail industry during the first two months of 2009, with more than 40% of stories analyzed mentioning the retailer. Due to its negative attention, however, Walmart’s overall rating was slightly unfavorable at 49.

“The more mentions a retailer gets they tend to be less substantive so it limits the ability to get good coverage,” says Chris Scully, VP, CARMA International, Inc. and author of the report. “Generally that’s the law companies run into, when they get a lot of coverage that at some point, they have favorability go down because instead of having a decent amount of in depth stories, they will have a lot more passing mentions. Costco avoided that…they got positive attention.”

Walmart has been called “evil” or “a shining example of American capitalism” in the blogosphere. Therefore, despite having a larger volume of favorable CGM reports (49 posts) than unfavorable CGM reports (43 posts), its overall favorability rating was 49. Although Walmart’s attention was negative overall, it did prevail as many posts noted the retailer excelling in such a poor economy—several blogs detailed its strong sales and earnings results.

“The reasons people were writing about Costco were different from the reasons they were writing about Walmart,” says Scully. “It’s a brand issue. For Walmart, a lot of the intensely negative blog posts we saw were people taking a political stance or writing about economic or community issues. The people writing about Costco were really talking about their visit to the store, and its offerings. It was more about individual shopping experience. Walmart had some of those stories, but a significant portion was unrelated to the shopping experience, which I think has a lot to do with the discrepancies in their performance in the study.”

Macy’s and Sears demonstrated the worst overall performances in CGM coverage –both retailers underperformed the industry average for coverage favorability while simultaneously seeing their volume of coverage exceeds the average. A large portion of negative attention highly visible across consumer generated media outlets is a worst case scenario for retailers, according to the report.

5% or more reports analyzed gave negative feedback on Macy’s, which gave the retailer a slightly unfavorable rating of 47. Macy’s was harmed by a considerable amount of reports focusing on its financial performance and store closings. Sears tied for the second worst favorability with a slightly favorable 48 rating. Qualms with Sears’ customer service were a main cause of its poor showing. Several of the posts analyzed showcased detailed complaints from consumers about their difficulty resolving problems with Sears.

The CARMA Favorability Rating System runs on a 0 to 10 scale, with 0 signifying the most unfavorable coverage possible; with 100 signifying the most favorable coverage possible; and with 50 signifying neutral coverage.